COMMUNITY UPDATE

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Asking any leader the meaning of the word ‘strategy’ is like asking a group of Eskimos to describe ‘snow’ - you’ll get lots of different answers. But isn’t ‘strategy’ simply about making choices? The choices you make will create a route map that enables you to achieve your overarching vision or purpose. So, what steps can you take to ensure those choices are easily understood and actionable? As we enter the second decade of this century, it is timely to ask a selection of our Members for their thoughts on strategy.

Your strategy should always begin with the key question “what needs do we serve and satisfy?” Once answered, there are seven further questions that will help you develop your strategy:

1.Who has and will have those needs?

2.Where are those people?

3.Are these enduring or transient needs?

4.What products and/or services satisfy those needs?

5.What capabilities are required to build/distribute these products/services?

6.Can these capabilities satisfy any other needs?

7.How can competitive advantage be underlined in satisfying those needs?

Nicky Bicket, MD of the Strategic Thinking Group and Managing Partner of The Katale Partnership, says: “Strategies should not be misleading. Quite the contrary, they should provide clarity of purpose and sharpness of focus. Elaborate and complicated strategies are simplistic and useless. Simple strategies just mean they aren’t complicated. The choice is yours of course. The creation of a simple strategy is a very different - and much more difficult exercise - than creating a simplistic one.”

Martin Balaam, MD - BT Engage IT, BT Group, agrees: “Lots of people confuse strategy with vision. Strategy is how you are going to achieve your vision - if you don't know where you want to be then you better start with getting a vision. And your strategy must be simple - if you cannot articulate it in a few bullet points of plain English, then it’s too complex. Strategies need to be practical and easy to translate by your staff. Try to put yourself in, for example, a receptionist’s shoes: will it be relevant to them? Will they know how they should behave and how their role helps execute the strategy?”

But what needs do we (want to) serve and satisfy, and what capabilities do we require to do so?

Geraint Anderson, CEO of TT electronics plc, agrees that strategy is about making choices, but adds that “the skill comes down to selecting the strategy that will give your businesses the greatest chance of success. You must then have the passion, drive and consistency to see it through with outstanding execution. The seven steps simplify the process of strategy but, as a first priority, you need to match the needs you want to satisfy with the capabilities of your organisation.”

Ruth Cairnie, VP Commercial Fuels, Shell International Petroleum Company Limited, goes further: “Strategy is the choices we make about which markets, which segments, which offers, which business models. In my experience, the most impactful strategic statements can be explicit choices about what we will not do – this really gives clarity and focus to the whole organisation. The strategy needs to be topped and tailed with a vision – an inspiring picture of what our business will be like when the strategy has been implemented – and the key actions to get there.”

Martin says: “Don't take a blinkered view - look at the macro economic trends. Most smaller businesses should ignore at their peril what the global trend is on their products and services. Look at Gartner or Forrester or ask their advisors if they have access to some market research. I would never recommend setting a strategy on the back of market research by others, but it may bring to the fore a trend that you knew was there but were in ‘subconscious denial’ about.”

Tony Cocker, CEO of E.ON Energy Trading SE, agrees and says that strategy is formed from listening to external stakeholder perspectives and debating their competing philosophies. He says: “Diversity of perspective is vital. We build scenarios for the future and benchmark against our competitors like any other big company. But we also seek to have quality conversations with our external stakeholders - the NGOs, governments and representatives of our customers that observe our industry - to find out what they think. Coming out of the downturn, it’s been essential to make these conversations work and to feed back the debates, so that we are actively challenging reality, not just the numbers. We’ve taken the old tools, honed them, and seek to have better conversations around them - conversations that do not exclude the voices at the lower levels of the organisation. We’re now more focused on our priorities and have made our portfolios simpler. We ask what our base view of the future is and align our portfolio against it. Then we look at the scenarios and decide on the options.”

How do you know that it’s the right strategy? In fact, is there such a thing? Or does strategy just evolve?

Bob Emmins, CFO, ABF Ingredients, says: “You need an initial unstructured exchange of views about what could be achieved, but it then needs to be brought down to earth with meaningful analysis about how outside pressures will react to your plans. How will your customers react? What’s your competitor advantage? Is it sustainable? Once you believe you have a defendable strategy, you need to establish what success should look like – market share, operating profit, cashflow – and why you have the skill set to deliver it. Yes, you start with a ‘vision’ and yes you have to ‘make choices’ and have ‘management buy-in’ but, as with all aspects of business, the devil is in the detail.”

Stuart Green, CEO, ZOO Digital Group plc, says: “It should be possible to articulate the means by which a goal or a set of objectives will be achieved in a way that is easy for all stakeholders to understand – one side of a piece of paper is plenty. The strategy should make the business distinct and provide competitive advantage.”

Once we’ve decided on certain choices, how do we go about implementing them?

Kelvin Harrison, Chairman, Maxima Holdings plc, says: “Who should do what in terms of strategy? It’s the job of the CEO to present the board with a vision, a strategy for achieving that vision and then to lead the business in the execution of that strategy. It’s the job of the Chairman to lead the board in making sure that that vision is optimum for the stakeholders (the shareholders in particular), in stress testing the strategy and in ensuring successful and timely execution. Failure is often due to poor vision or strategy, but a good strategy is not enough; good execution is even more important. Successful execution is not about blindly pursuing the strategy, but has feedback loops that take account of results, changes of circumstances and events.”

Bernie Waldron, Associate, Criticaleye, adds: “There’s nothing particularly mystical about strategy. Like anything else important and difficult in life, it’s the result of hard work. Hard work by insightful people in developing a coherent set of plans to change the current course of the organisation; hard work in testing the real feasibility of those plans and hard work in honestly reviewing progress on a regular basis, learning from over- or under-achievement, and adjusting the plans in flight.”

Clive Ansell, MD of Technology at Tribal Group, says: “Strategy is about making choices, but making sure we really understand the range of available actions and outcomes is a key step. True customer insight is difficult to generate and a key task is to make sure it permeates an organisation, from ‘bottom to top’.”

To the initial seven steps, Clive adds the following caveats:

Keep an eye on the macroeconomic scene as a constraint on the business

Emphasise building core competences over time - even through the ups and downs

Create strategic flexibility - some alternatives in the company’s future

Get to grips with your stakeholder management

Martin adds: “Be realistic about your current issues. There is no point in having the world’s best long-term strategy if you do not achieve the minimum short-term, financial, objectives. If you have severe short-term financial issues, concentrate all your energies here until you are totally confident these issues are nailed. Otherwise it may be someone else executing your amazing strategy while you are looking for a new employer.”

Nicky concludes: “Just before you, the executive team, rush off to the bar for that celebratory strategic drink, ask yourselves whether the needs you started off wanting to serve and satisfy are truly served and satisfied by the remaining choices you’ve made. If the answer is yes, you will have a great strategy, which everyone can understand and action. If the honest answer is no, start again.”